Data on the Bitcoin chain shows 5 reasons why BTC bottom may be coming in


After November’s whirlwind for Bitcoin (BTC), certain chain and Bitcoin price indicators suggest that BTC’s bottom may occur in December. In a recent report from Capriole Investments, they provide analysis on Bitcoin bottoming out. Considering realized value, miner surrenders, mining electricity costs, declines and record hodler numbers, a $16,600 – $16,950 BTC floor appears to have formed.

Here are five reasons why Edwards believes the price of Bitcoin is nearing a low.

SLRV bands provide a buy signal

SLRV feeds track investment flows by combining the 30-day and 150-day moving averages into the SLRV ratio, which is the percentage of Bitcoin moved over a 24-hour period divided by BTC held over 6-12 months.

Bitcoin SLRV tapes. Source: Glassnode

According to Charles Edwards, the SLRV bands outperform the BTC HODL strategy, making it a strong indicator of where the BTC price may be headed.

Although SLRV bands have been bearish throughout 2022, the recent move to $16,600 has turned the indicator bullish. According to Edwards, the change creates a buy signal for investors and institutional funds still in the market, thus making a strong case for Bitcoin’s price floor.

BTC price falls below global electricity costs

Although it is known that a large number of Bitcoin miners are currently operating at a loss, this is not a rare occurrence in the history of BTC.

The total production cost of Bitcoin miners includes mining equipment, operating costs, capital costs, variable power contracts and other factors, while electricity costs only consider the raw electricity used to mine BTC.

Bitcoin production cost and BTC electricity cost. Source: Glassnode

Crude electricity has historically been a Bitcoin floor, as it is rare for BTC to trade below this price point. Historically, Bitcoin has only sold below electricity four times, the most recent being on November 10, when bitcoin electricity reached $16,925.

BTC miner sales peak

Miners are still losing money with production costs above the spot price of Bitcoin. This dichotomy forces miners to sell Bitcoin to stay afloat.

The current level of Bitcoin mining is the third largest in history, the other two events are when BTC was $2.10 in 2011 and $290 in 2015.

Miner BTC selling pressure, best events. Source: TradingView

In hindsight, investors would like to see those prices return, and according to Edwards, the current BTC price may represent a similar value.

Bitcoin Hash Tapes Confirm Another Miner Submission

A Bitcoin miner surrender involves miners turning off their ASICs that are no longer profitable and selling some of their Bitcoin reserves to cover costs.

According to Capriole Investments, when miners capitulate, a low price is formed before the hash rate starts to improve. As noted in the chart below, another miner capitulation took place on November 28th, and if the analysis is correct, this will mark Bitcoin’s bottom around $16,915 as the hash rate starts to rise after November 28th.

Bitcoin mining hash tapes. Source: TradingView

Related: Bitcoin clings to $17k as ARK ‘historic surrender’ flags

Despite the historic price drop, it has maintained an all-time high bitcoin

One metric used to analyze Bitcoin hodler behavior is the Long-Term Owner’s Net Profit and Loss (NUPL) tracker.

Throughout the history of Bitcoin, the NUPL metric has only experienced such a large drop four times.

Bitcoin NUPL metric. Source: Glassnode

Previous instances of such large declines have represented the value of Bitcoin purchases for investors. Edwards suggests that investors choosing to accumulate when the BTC price is undervalued could further strengthen Bitcoin’s bottom line.

Another trend is formed when the long-term hodlers metric reaches peak numbers. Currently, 66% of the Bitcoin supply is held by long-term hodlers, meaning they have held their Bitcoin for more than a year.

According to Edwards, this behavior is consistent with changing macro markets.

Although the markets are still highly correlated with stocks and sensitive to macro market changes, many data points indicate that Bitcoin may be in the final stages of a bottoming out process.